Why Did Ethereum Rise Today? Bitcoin Rally and Massive Short Squeeze Drove the Surge

▲ Ethereum (ETH), Bitcoin (BTC)/AI generated image ©

Ethereum (ETH) has recaptured its highest price in 9 months, drawing market attention, riding a powerful wave of large-scale short squeezes and institutional fund inflows initiated by Bitcoin.

According to cryptocurrency market data aggregator CoinMarketCap on September 22 (local time), ETH rose 5.99% over 24 hours to $2,772.59, closely tracking the overall bullish trend in the market. The correlation coefficient with the US S&P 500 index reached 73%, indicating that macroeconomic factors significantly influenced the market.

The primary driver of this rally is the overall market beta increase, which coincided with Bitcoin (BTC)'s 7.37% surge. As the total cryptocurrency market capitalization swelled by over $130 billion, $593 million in net inflows into US spot Bitcoin ETFs over Thursday and Friday reversed previous outflows. This, combined with falling oil prices and stabilizing US Treasury yields, supplied strong liquidity to risk assets across the board.

Cascading liquidations in the futures market and accumulation by whale investors also amplified the upward momentum. Over $750 million worth of cryptocurrency positions were liquidated within 24 hours, with short (bearish bets) positions accounting for $620 million. Ethereum short position liquidations alone totaled $157.97 million, leading to forced buying. On-chain data also confirmed strong confidence from long-term holders, with one whale swapping $86 million worth of Bitcoin for 34,422 ETH and then staking all of it.

The short-term market outlook hinges on whether the $2,695 support level holds. If it maintains the $2,695 level, which is the 50% Fibonacci retracement level, a path opens to test the psychological and technical resistance zone of $2,900-$3,000. However, failure to defend this support could lead to a downward correction towards the $2,630 vicinity. The University of Michigan's final inflation expectations report, due on September 25, is also expected to act as a variable in macroeconomic sentiment.

Experts are watching closely to see if the ETH/BTC ratio can break above the 0.0335 resistance level within 24-48 hours amid continued upward momentum. They assess that if this resistance is breached, market leadership will shift to a full-fledged altcoin season.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*